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2018 Supreme(Del) 1198

IN THE HIGH COURT OF DELHI AT NEW DELHI
VIBHU BAKHRU, J.
UNION OF INDIA - Petitioner
Versus
INDERJIT MEHTA CONSTRUCTION PVT. LTD. - Respondent
O.M.P. (COMM) 244, 242 of 2017 & IA Nos. 6283, 6272 of 2017
Decided On : 10-05-2018

Advocates Appeared:
For the Petitioner: Mr. Bhagwan Swarup Shukla and Mr. Shekhar Gehlot.
For the Respondent: Mr. Praveen Chauhan and Ms. Jhanvi.

Headnote:

Arbitration - Construction Contracts - Arbitration and Conciliation Act, 1996, Section 34 - Neeru/Sagol coat, Extension of Time - 11.1.3 P-201, 11.1.4 P-201, App. ‘B’ P-287 of CA - The Arbitral Tribunal found that the petitioner was insisting on a smooth finish that could not be provided by the material specified in the Contract Agreement, and thus the additional coating over the plaster surface, as was performed by the respondent, was required. The Arbitral Tribunal's decision was upheld as it was found to be within the jurisdiction of the Arbitral Tribunal to interpret the contract and make an award based on such interpretation.

Fact of the Case:

The respondent, a contractor, was engaged to complete construction works for dwelling units. Disputes arose, and the respondent invoked the arbitration clause. The Arbitral Tribunal awarded amounts against certain claims made by the respondent, which the petitioner challenged in the present petition.

Finding of the Court:

The Arbitral Tribunal's decision to award compensation for the additional coating over the plaster surface was upheld as it was found to be within the jurisdiction of the Arbitral Tribunal to interpret the contract and make an award based on such interpretation. The decision to award damages for prolongation of works was also upheld as the reasons for delay did not fall within the scope of the contract clause prohibiting the award of damages for extension of time.

Issues: The issues involved the interpretation of the Contract Agreement and the applicability of the contract clauses in awarding compensation for additional work and damages for prolongation of works.

Ratio Decidendi: The Arbitral Tribunal's interpretation of the contract and its decision to award compensation for additional work and damages for prolongation of works were upheld as being within its jurisdiction and not contrary to the terms of the contract.

Final Decision: The petition was dismissed, and the Arbitral Tribunal's decision to award compensation for additional work and damages for prolongation of works was upheld.

JUDGMENT :

VIBHU BAKHRU, J.

1. The petitioner has filed the present petitions under Section 34 of the Arbitration and Conciliation Act, 1996 (hereafter 'the Act') impugning an arbitral award dated 28.12.2016 (hereafter 'the impugned award') passed by an arbitral tribunal comprising of a sole arbitrator (hereafter 'the Arbitral Tribunal'). The impugned award was rendered in the context of disputes that have arisen between the parties in relation to the contracts entered into between the parties, namely, for “completion of balance works of construction of dwelling units including allied external services for Lulla Nagar area, Pune, Maharashtra” for a contract value of Rs. 17,52,30,500.92/-, and “completion of balance works of construction of dewelling units including allied external services at Pune (camp area)” for a consideration of Rs. 31,44,74,077.84/-.

2. The controversy involved in both the petitions herein is common. It is seen that the pleadings in these petitions are almost similar. In order to address the controversy involved, this Court would refer only to the facts as relevant to OMP (Comm) 244/2017. The counsel appearing for the parties also agree that the decision in the said matter would be determinative of the controversy involved in other petition as well.

3. Briefly stated, the relevant facts necessary to address the controversy involved in the present petition are as under :-

3.1 The respondent is, inter alia, engaged in the business of acting as a contractor for civil and engineering works. On 03.06.2009, the petitioner invited tenders for the “completion of balance works of construction of dwelling units including allied external services for Lulla Nagar area, Pune, Maharashtra” (hereafter 'the Project'). Apparently, the contract awarded in respect of the construction of dwelling units had been awarded to another contractor but had been terminated prior to completion of the works. In these circumstances, the petitioner had invited tenders for execution of the remaining work. The respondent submitted its bid and it was accepted on 17.09.2009. The parties also entered into a Contract Agreement (Although some of the relevant clauses have been filed, but the Contract Agreement has not been filed and the petition is also silent as to when it was executed).

3.2 The Project was required to be completed in two phases; Phase I was to be completed by 16.12.2009 and Phase II was to be completed by 16.06.2010.

3.3 Admittedly, the execution of the work was delayed due to various reasons, including the stay order granted by this Court at the instance of the original contractor. The works relating to Phase-I were completed on 22.07.2010 and Phase-II were completed on 15.06.2011.

3.4 Thereafter, the respondent raised a final bill with certain claims, but the same was rejected by the petitioner on 12.03.2013. This led the respondent to invoke the arbitration clause. And, the Sole Arbitrator was appointed on 27.06.2013 to adjudicate the claims made by the respondent.

4. The respondent filed its Statement of Claims raising eight claims: (i) Claim No.1 for non-payment of “Neeru/Sagol coating” on internal walls of all DUs amounting to Rs. 40,69,358/-; (ii) Claim No. 2 on account of extra expenditure incurred for procuring sand from outside Maharashtra due to ban on mining amounting to Rs. 13,48,82/-; (iii) Claim No. 3 on account of less material received under schedule of credit amounting to Rs. 17,94,400/-; (iv) Claim no. 4 on account of delay in payment of final bill and release of retention money amounting to Rs. 3,10,000/-; (v) Claim No. 5 on account of recovering extra interest for towards mobilization advance amounting to Rs. 1,73,500/-; (vi) Claim No. 6 for damages on account of breach of contract amounting to Rs. 7,48,58,000/-; (vii) Claim no. 7 for past, pendente lite and future interest at the rate of 18% on aforesaid claims; and (viii) Claim No. 8 on account of costs of arbitration amounting to Rs. 3,00,000/-. The petitioner a












































































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